Section 13(f)

Section 13(f) creates a comprehensive disclosure framework for institutional investment managers. This framework ensures transparency regarding the equity holdings of large investment managers, including most established hedge fund managers. The provision supports market oversight and provides valuable data for regulatory monitoring and market surveillance.

Essentially, this rule requires large investment managers to regularly report what stocks they own to the Securities and Exchange Commission (SEC). The SEC then makes this information available to the public, creating transparency in how major investors are positioning their portfolios.

The regulatory definition encompasses two categories of filers. First, it includes any entity—other than individuals acting solely for their own accounts—that invests in or purchases and sells securities for its own account. Second, it covers any person, whether an individual or entity, that makes investment decisions on behalf of other accounts over which they exercise discretionary authority.

This broad formulation captures most hedge fund managers who direct investment strategy for client capital. It also includes registered investment advisers Registered investment adviser (RIA) A registered investment adviser (RIA) is a hedge fund manager or other investment adviser that has registered with the SEC or state securities regulators. These advisers must follow comprehensive rules including fiduciary duties, compliance requirements, and regular examinations. , banks, insurance companies, pension funds, and other institutional investors exercising investment discretion.

The inclusion of individuals who exercise discretionary authority over client accounts is important to understand. Even if these individuals also manage personal portfolios, they are subject to Section 13(f) reporting if the threshold is met across their managed accounts. This means a hedge fund manager operating as a sole proprietor would still need to file if they manage enough client money.

The Exchange Act requires institutional investment managers to file Form 13F based on the aggregate fair market value of their discretionary holdings. The rule uses a $100 million threshold that is measured as of the last trading day of any month during the calendar year. Once this threshold was exceeded during any calendar month, the manager had to file quarterly reports with the SEC.

Here's how the timing worked: Initial filings were due within forty-five days after year-end. Subsequent quarterly filings were due within forty-five days following the close of each of the first three quarters of the next calendar year.

This threshold-crossing mechanism meant that managers exceeding $100 million at any point during a calendar year remained obligated to file throughout the following year, even if holdings later dropped below the threshold. Understanding this "sticky" filing obligation was essential for compliance planning, as the determination occurred monthly, not annually.

For example, if a hedge fund manager's portfolio reached $105 million in June 2024, they would need to file Form 13F reports for the rest of 2024 and all of 2025, even if their portfolio dropped to $80 million by December 2024.

Section 13(f) applies specifically to a defined universe of securities. Filers must report holdings that include several key pieces of information: the issuer name, security class, CUSIP numberA unique nine-digit identifier assigned to securities to facilitate trading, settlement, and clearing in the United States financial markets. (a unique identifier), share count or principal amount as applicable, and the aggregate fair market value of each position.

The SEC maintains an official list of qualifying securities, updated quarterly. This list covers securities admitted to trading on national securities exchanges or quoted on automated quotation systems of registered securities associations—generally exchange-listed equity securities and standardized options.

The definition excludes many categories of investments. These exclusions include debt securities traded on exchanges, securities futures, open-end mutual funds, derivativesFinancial instruments whose value is derived from underlying assets, including options, futures, swaps, and forwards., and other instruments not meeting the technical definition of Section 13(f) securities. Managers must reference the SEC's official quarterly list to determine whether specific holdings trigger reporting obligations.

This exclusion has particular relevance for hedge funds employing fixed income or derivatives strategies. These strategies may fall outside the Form 13F reporting regime despite representing significant portfolio components. A hedge fund focused primarily on bond trading or complex derivatives might have billions under management but no Form 13F filing obligations.

In November 2022, the SEC adopted Rule 14Ad-1, which became effective July 1, 2024. This requirement integrated a new compliance obligation for all Form 13F filers: annual reporting on Form N-PXAnnual report form that institutional investment managers must file to disclose how they voted on executive compensation matters at public companies in their portfolios. regarding their proxy voting on compensation-related matters at portfolio companies.

Form 13F filers must now publicly disclose, on an issuer-by-issuer basis, how they voted on say-on-payShareholder votes on executive compensation packages presented at stockholder meetings, a disclosure matter for which Form 13F filers must report their proxy voting positions. proposals and related pay-related matters presented at stockholder meetings. Say-on-payShareholder votes on executive compensation packages presented at stockholder meetings, a disclosure matter for which Form 13F filers must report their proxy voting positions. proposals are shareholder votes on executive compensation packages that became common after the 2008 financial crisis.

The first Form N-PX filings under this regime were required by August 31, 2024, covering voting during the July 1, 2023–June 30, 2024 period. Subsequent annual filings are due on a rolling basis, creating an ongoing disclosure obligation that runs parallel to Form 13F reporting.

This linkage means that managers filing Form 13F must now plan for dual disclosure regimes covering both holdings and voting conduct. The voting information becomes public and subject to investor scrutiny.

Section 13(f) operates within a comprehensive regulatory framework addressing institutional investment activity. While Form 13F focuses specifically on equity holdings transparency, other forms capture different aspects of investment manager activity.

Form PF Form PF Form PF is a required SEC filing for investment advisers who manage private funds with at least $150 million in assets. The form collects detailed information about how these funds operate, including their use of borrowed money, investor makeup, and investment holdings. This data helps regulators monitor risks that could affect the broader financial system. captures broader private fund information for systemic risk monitoring. Schedules 13D Schedule 13D Schedule 13D is an SEC filing that individuals or groups must submit when they acquire more than 5% ownership in a publicly traded company's voting stock. The filing reveals who the buyer is, why they bought the shares, and what they plan to do with their ownership stake—making it especially important for activist hedge funds. and 13G Schedule 13G Schedule 13G is a simplified alternative to Schedule 13D available to certain investors acquiring more than 5% of a company's shares without the intent to influence control, typically used by passive hedge funds making significant investments. address beneficial ownershipThe concept of identifying the natural persons who ultimately own or control a legal entity, used in compliance screening to detect indirect relationships with sanctioned parties. disclosure for significant equity positions exceeding 5% thresholds. Form N-PXAnnual report form that institutional investment managers must file to disclose how they voted on executive compensation matters at public companies in their portfolios. now extends this transparency to proxy voting patterns.

Together, these requirements create a multi-layered disclosure ecosystem. This ecosystem provides regulators and the public with visibility into investment manager activity across multiple dimensions: holdings, systemic exposure, significant beneficial ownership positions, and voting conduct.

Managers must maintain coordinated compliance systems addressing all of these overlapping requirements. Each requirement has distinct definitions of 'investment discretionThe authority granted to an investment manager to make trading decisions on behalf of clients without obtaining prior approval for each transaction.', different threshold levels, and varying reporting timelines. Effective compliance requires understanding how these various disclosure obligations interact and overlap.

For hedge fund managers, Section 13(f) compliance represents both a regulatory obligation and a significant competitive consideration in the current enforcement environment. While quarterly filings provide market participants with insights into fund positioning, the standard reporting delay and quarterly frequency mean that disclosed holdings may not reflect current investment strategies. This is particularly true for funds employing active trading approaches or tactical allocations.

The addition of Form N-PX requirements has intensified the transparency implications. Managers must now factor in that their proxy voting decisions on compensation matters will be disclosed alongside their Form 13F holdings. These voting decisions may reflect fund governance philosophy or activism strategies.

This dual transparency can influence fund strategy decisions. Managers weigh the competitive disadvantage of public holdings disclosure and voting conduct transparency against the benefits of maintaining positions in covered securities.

The compliance environment shifted significantly in 2024. In September 2024, the SEC conducted an aggressive enforcement sweep, settling cases against 23 institutional investment managers for late or missed Form 13F filings. This represented a significant escalation from prior enforcement patterns. Penalties ranged from $30,000 to $750,000, with some managers facing liability for years of compliance failures.

This enforcement intensity elevated Form 13F filing accuracy and timeliness to a critical compliance priority. The SEC demonstrated willingness to pursue even relatively minor delinquencies. Confidential treatment requestsRequests submitted to the SEC by filers seeking to withhold certain information from public disclosure in SEC filings, typically to protect proprietary or competitive information.—historically available for sensitive holdings—are now rarely granted for information from 2024 forward. This further limits strategies for managing competitive sensitivity of disclosed positions.